Few companies have as powerful growth orbitals as Taiwan Semiconductor Manufacturing. (TSM 0.56 %)。 TSMC is the world’s largest contracted chip manufacturer, as it is known. In other words, it works as a manufacturing company for those who do not have the ability to produce chips on their own. As a result, the TSMC is well positioned on the road ahead and is essential for almost all investors.
However, wrench has recently been thrown into AI investment papers by DeepSeek’s R1 model and swept the world. So is this a big deal for TSMC? Or is it okay in the long term?
DeepSeek’s AI model does not affect the TSMC trajectory
Deepseek’s R1 model is a true innovation, but does not affect the long -term execution of investment in TSMC. The biggest breakthrough Deepseek found in its generated AI model is a way to make training more efficient, lowering computing ability.
The market assumed that companies need to buy less computing power to handle these models, but that is not the right way to see it.
Instead, AI spending can be continued at the same pace, but the model will be more efficient. The more efficient models and training skills increase the pace of innovation and usefulness, accelerating all of these AI investment payoffs.
Anyway, this does not affect the TSMC investment paper. This is because you can make a profit by creating chips used in GPUs to train these AI models or by creating chips used in devices that execute these AI models.
TSMC is a top supplier of almost all sector, so there is still a bright future. Therefore, investors need to consider using stock dips. I don’t often buy such an opportunity.
Inventory is sold after the fall
After almost all AI shares were sold on Monday following the report of the DeepSeek model, the TSMC stock is the highest 10 % off in history. This represents a great value, especially the company trades 29 times later revenue and 22 times forward revenue.
TSM PE ratio, data by YCharts. PE = Price for revenue.
This price is a bargain for growth that chip manufacturers are expected to endure. The management is increasing significantly in the next five years, and the company is expected to enjoy a 20 % complex growth rate (CAGR). AI -related hardware is expected to produce even better profits because it requires 45 % CAGR in the next five years.
Chips are often placed many years ago, and AI’s single breakthroughs do not change their patterns. The company’s growth trajectory is still very powerful, and other factors help achieve its growth rate.
These include new chip technology, which will be released later this year. TSMC’s 2 nanometers (2nm) chips provide serious efficiency improvements and provide the same computing ability as the previous generation of 3nm chips, reducing energy by 20 to 30 %. In the latter half of 2026, the company’s A16 chip debuted and provides energy savings from 15 % to 20 % from 2nm chips.
Energy consumption is a large operating cost for AI hyper -color (such as Deepseek), so these new tips should be popular with Hyper -Color.
Along with the groundbreaking innovation, a lot of growth remains in the chip space. Deepseek’s efficiency is impressive, but many of the domestic AI platforms can be copied in the coming months, bringing new efficiency to the AI world. This does not stop AI investment, so DIPs on TSMC’s shares should be considered as a purchase opportunity.
KEITHEN DRURY has a position for manufacturing Taiwanese semiconductors. Motley fools are in the process of manufacturing Taiwanese semiconductors and are recommended. Motley fools have a disclosure policy.
